Download Cervest’s infographic to find out how you can comply with TCFD recommendations – strategies a), b) and c), risk management a) and b), and metrics a) – using our climate intelligence product, EarthScan.
By 2050, a 3.2°C increase in global temperatures means the UK stands to lose 10% of its GDP to the ongoing effects of climate change. As projections of how climate change could affect the economy grow more severe and ever closer, the UK government became the first G20 nation to introduce mandatory reporting in line with TCFD (Task Force on Climate-related Financial Disclosures) recommendations which require companies to disclose both transitional and physical climate-related financial risks. By the end of the financial year (April 2023), more than 1,300 of the country’s largest companies will be obligated to publish detailed information about the financial impact of climate change on their business.
For its 2022 Status Report, the TCFD reviewed publicly available reports of over 1,400 companies from eight industries and five regions to better understand current climate-related financial disclosure practices and their evolution. It found that 80% of organizations disclosed in line with at least one of the TCFD-recommended disclosures for the 2021 fiscal year, but only 40% disclosed in line with at least five, which still falls short of reporting across all the TCFD’s 11 recommended disclosures.
The cost of inaccurate climate disclosures
ESG and Risk Managers face multiple challenges to making the credible and accurate disclosures required to comply with these new regulations. A recent review from the Financial Conduct Authority also found that although 81% of UK companies submitting disclosures were confident they complied with all TCFD recommendations, the reality was that their disclosures lacked necessary detail. It’s clear that companies lack accessible and accurate data on their climate risks, and also struggle to conduct credible climate scenario analysis.
The cost of inaccurate reporting on climate risk is incredibly high in both the short and long term. Not only can non-compliance result in immediate fines of a minimum of GBP2,500 and a maximum of GBP50,000, but individual companies will lose out on discovering, and therefore acting on their own physical climate risk and opportunities. The Global Center on Adaptation reports that investment in climate resilience nets an ROI from 2:1 to 10:1.
It pays to understand your climate risk and opportunities. Even though they’re already working at full capacity, can ESG and Risk teams really afford to publish inaccurate or incomplete climate disclosures? To comply with the TCFD’s recommendations, they need access to science-backed climate risk insights. Fast.
Get ready for TCFD reporting with EarthScan
Our climate intelligence (CI) product EarthScan™ enhances reporting with asset-level physical climate risk insights. Built on five years of research and development by a team of world-leading multidisciplinary experts, Cervest’s CI is powered by a fusion of earth science, data modeling, and machine learning (ML) technology.
Spanning multiple time horizons, climate hazards, and three different IPCC-aligned climate scenarios, EarthScan enables ESG and Risk Managers to generate climate risk insights on demand. These downloadable insights can be easily added to reports to help companies comply with TCFD recommendations, including strategies a), b) and c), risk management a) and b), and metrics a). Download our infographic to discover exactly how EarthScan can help streamline a company’s TCFD-reporting process.
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